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So far in 2016, markets across the world are plunging and forecasting a global recession and bear market for stocks. The broad based selling and bearish action we are seeing across a slew of asset classes tells us the long 6.75 year bull market for stocks is over and we are in the early stages of a new bear market. Most of the market (see below) is already down over 20% (official definition of a "Bear market") which means it is just a matter of time until the major indices play catch up to the down side. Remember, in bear markets surprises happen to the downside. If the major indices continue falling, the selling we have seen so far in the first few weeks of 2016 is only the beginning and will most likely get much worse.

The Primary Driver Of The Entire Bull Market Is Gone

For years, we have argued that the primary driver of the entire bull market in stocks was free/easy money from the Fed and other Central Banks. On Wednesday Jan 13, 2016 I wrote an article for Forbes titled, "Wall Street's Trouble Starts With The End Of Free Fed Money" which showed the facts that support my thesis. In fact, since QE 3 ended, U.S. stocks have gone virtually nowhere (formed a large top), credit markets have imploded, currency markets are trading all over the map and nearly every major commodity in the world is now in a bear market! The last bullish domino to fall were global equity markets and they're now falling...and falling hard.

1987 All Over Again?

The action over the past few weeks on Wall Street reminds me of what has happening before Black Monday in 1987. In 1987, stocks topped out in August and crashed in October. This time around stocks topped out in the middle of 2015 (teased to the downside in Aug 2015) and once again falling hard in early 2016. In 1987, the bull market in stocks and the bull market in credit had ended. The same is happening in 2016. In 1987, stocks were already down considerably on the Friday before Oct 19, 1987 (a.k.a Black Monday). In 2016, stocks are down considerably as we enter a long weekend in the U.S. I hope I'm wrong and I know anything is possible but all I want to do is share with you what I see happening and let you decide. I want you to be prepared BEFORE the major indices implode. To be clear, I believe we are in the early innings of a new bear market and what we saw so far in the first few weeks of 2016 might lead to a lot more selling (unless, of course, the Fed steps in and interferes with markets again).

Let's Look At The Facts & Let The Market Do The Talking

S&P 500 in 1987

1987 Crash

Major Indices in 2016:

A Closer Look At Where Everything Is Trading In 2016:

The market is deeply oversold and this is a perfect place to bounce. We'll see what happens next week but notwithstanding a short term bounce. The outlook on Wall Street and Main Street look bleak.